Noble notes mostly positive after share repurchase news; Mallinckrodt high volume continues

By James McCandless

San Antonio, Feb. 15 – Traders reported a lower amount of activity than was expected Thursday, as investors continue to hold on to their capital.

Notes in Noble Energy, Inc. largely gained on the day after the company announced a share repurchase as well as a selloff of its Gulf of Mexico assets.

Mallinckrodt plc issues extended a run of high volume after announcing on Tuesday that it had completed its acquisition of Sucampo Pharmaceuticals.

Revlon, Inc. paper climbed higher yet again, continuing its high level of trading since announcing that its chief executive officer would be leaving the company.

Frontier Communications Corp. and Intelsat SA maintained their status as recurrent volume favorites in the telecom sector and in distressed overall. As traders can only speculate on the fate of Hexion, Inc., its paper continues to be in the spotlight.

Noble announces buyback

Notes in Houston-based independent oil and gas company Noble Energy reacted positively, traders said, to the news that the company would be repurchasing $750 million of its shares, approximately 6% of total outstanding shares. It also announced the $710 million sale of its deepwater Gulf of Mexico assets to Fieldwood Energy LLC (see related story elsewhere in this issue). In a release, president and chief executive officer David Stover said that the company will be able to explore opportunities that generate more benefit in the long term.

“This has been done to focus our go-forward efforts on those assets that will rapidly grow our cash flows and margins, primarily the U.S. onshore business and the Eastern Mediterranean,” Stover said. “Going forward, we are concentrating the company’s exploration capabilities on higher-impact opportunities that can drive substantial long-term value creation.”

The 5¼% bonds due 2042 traded up about 3½ points to close near 66¾ bid. The 6.2% bonds due 2040 rose 2 points to close at 68½ bid.

Mallinckrodt rolls on

Riding the wave of news for a third day Thursday, market sources confirmed that issues in Britain-based drug maker Mallinckrodt continued high volume trading. The company announced on Tuesday that it had completed the acquisition of Rockville, Md.-based biopharmaceutical name Sucampo Pharmaceuticals for $1.2 billion.

“They’re generating a good amount of steam,” a trader said. “But there is no telling if all of this positive movement is sustainable in the long term. There’s still some stakeholders who have issue with the price of the acquisition.”

The 4¾% issues due 2023 climbed almost 3 points to close at about 80 5/8 bid.

Revlon in high volume

Notes in New York City-based cosmetics producer Revlon have been in high volume throughout the week, a trader said, continuing its recent trend of increased movement after announcing recently that CEO Fabian Garcia would step down from his post as the company focuses on reversing the losses of revenue experienced in the last two years.

The 5¾% notes due 2021 traded up about ½ point to close at 80 1/5 bid. The 6¼% notes due 2024 dropped 1 point to close at 65 bid.

Volume favorites trade

Distressed telecom names made up much of the volume on an otherwise slow day. Norwalk, Conn.-based wireline telecom Frontier Communications saw its issues trade up Thursday, continuing to be a mainstay in distressed trading.

The 7 5/8% issues due 2024 rose about 1½ point to end at 63¼ point. The 10½% issues due 2022 gained 3¼ points to close at 83¾ bid. The 11% issues due 2025 traded up about 3½ points to close at 77¼ bid.

Luxembourg-based satellite communications company Intelsat’s 5½% issues due 2023 closed the day up at around 79½ bid. The Intelsat Jackson SA 7¼% notes due 2020 rose 2½ points to close at 88½ bid.

Despite no new word on who could be the potential buyer for parts of Columbus, Ohio-based chemical producer Hexion, its paper continued to trade heavily Thursday.

The 9% paper due 2020 rose ¾ point to close at 82¼ bid. The 6 5/8% paper due 2020 edged up ½ point to close at 94½ bid.

“We had a nice little pullback today,” a trader said. “People trying to buy bonds over the last couple of days were stymied by the ETF’s not selling. So we kind of snapped back and then people didn’t want to pay today’s prices so we had a lackluster day.”

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